We've Witnessed the Stock Market Do This 19 Times in 76 Years, and Equities Have Been Higher One Year Later 100% of the Time

This has shaped up as another stellar year for the iconic Dow Jones Industrial Average (^DJI +0.49%), benchmark S&P 500 (^GSPC +1.31%), and growth-focused Nasdaq Composite (^IXIC +1.60%). The artificial intelligence (AI) infrastructure build-out, better-than-expected corporate earnings, and record S&P 500 share buybacks have collectively lifted all three stock indexes to several new highs.

But recent volatility also suggests that equities may be on shaky ground. Just two days after the midterm elections, on Nov. 5, the Nasdaq Composite logged its largest-ever single-day point decline (1,422 points).

While headwinds are clearly mounting on Wall Street, historical precedent offers a different take.

The stock market will need to climb a wall of worry

Election Day went, more or less, as the prediction markets had forecast. Democrats swept both houses of Congress, setting up a scenario in which few major spending bills will be signed into law from January 2027 through January 2029.

But there was one surprise on Election Night that clearly unnerved professional and everyday investors. Democrats flipped five governorships previously held by Republicans (with two races still uncalled by the Associated Press, as of Nov. 9), including in Texas, Ohio, and Georgia. These three states are critical to the AI data center build-out. Whereas President Donald Trump favors as little regulation as possible for AI, most Democratic lawmakers want to limit data center expansion and ramp up the vetting of large language models.

Gina Hinojosa may not be as bad for Texas data centers as it looks.

Her plan asks for: no subsidies, union labor, no NDAs, and proof household power and water bills won’t rise.

Much of that is already underway:

Amazon, Google, Meta, Microsoft, OpenAI, Oracle and xAI pledged in March to bring their own power and pay for transmission

Microsoft pledged to pay full property taxes without seeking tax breaks

Nvidia is working with Vistra, NextEra and Constellation on data centers that cut power use when the grid is strained

— Wall St Engine (@wallstengine) November 4, 2026

The stock market entered 2026 at its second-highest valuation in history. A market that’s priced for perfection can ill afford a slowdown in the AI infrastructure build-out.

The ideological differences between President Trump and the Democrat-led Congress will likely also make debt-ceiling negotiations more challenging.

If the Dow, S&P 500, and Nasdaq Composite are to reach new highs, they’ll have to climb the proverbial wall of worry.

This past event has a flawless track record of forecasting the future on Wall Street

Although no predictive tool can ever guarantee what the Dow, S&P 500, and Nasdaq Composite will do over the short term, some past events have a knack for foreshadowing the future. One, in particular, has a flawless track record, dating back to 1950.

According to data from Morgan Stanley (MS +1.63%), the S&P 500 has been higher at the six- and 12-month marks following each of the previous 19 midterm elections since 1950.

Carson Group’s Chief Market Strategist Ryan Detrick also notes that November has been green for the S&P 500 100% of the time following midterm elections over the last 76 years.

S&P 500 is higher 6 and 12 months after every midterm election over the last 75 years 📈🤑🥳 https://t.co/N1Eu0fZDie

— Barchart (@Barchart) November 1, 2026

Despite all the pre- and post-election noise that investors have been attempting to digest, history shows that stocks consistently head higher after midterm elections, regardless of how the political puzzle pieces are arranged. This data serves as a good reminder that factors such as corporate operating results, capital-return programs, management decisions, and innovation matter far more in the grand scheme of things on Wall Street than the makeup of Congress over the next two years.

Will there be stock market hiccups in the second half of Trump’s term? More than likely, yes.

But have the midterm elections materially changed the long-term outlook for equities? A resounding no.